CRBJY - China Debt Outlook: Moody's Cuts To Negative As Property Crash Continues To Weigh | Benzinga
Ratings agency Moody’s cut its outlook on China’s credit rating to negative on Tuesday, saying the country faces an economic slowdown as it continues to grapple with the fallout from the collapse in its property sector.
Moody’s rating reflected growing signs that debt issuance will be increased as financial support is provided to financially-stressed regional and local governments and state-owned enterprises, “posing broad downside risks to China’s fiscal, economic and institutional strength.”
The rating agency added: “The outlook change also reflects the increased risks related to structurally and persistently lower medium-term economic growth and the ongoing downsizing of the property sector.”
Market Reaction
The yield on China’s benchmark 10-year bond rose 32 basis points to 2.701%. Back in January, the yield hit a year high of just below 3%. The VanEck China Bond ETF (NYSE:CBON) rose 0.5% in pre-market trade. During November the CBON rose 3%.
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